Stocks didn’t have a good start last week, but they had an amazing finish. After a bearish Monday, the price reversed and recorded four great bullish sessions in a row. Every one of them was technically significant.
Up until Tuesday, we had a sell signal on the SP500. It was mostly because the price was below the neckline (purple) of a giant head and shoulders pattern (yellow). On Tuesday, the price started reversing and on Wednesday, came back above the neckline. That helped create the false breakout pattern (blue), which was a strong buy signal. Wednesday was crucial because we also managed to break the upper line of the flag, which confirmed the end of the bearish correction. Thursday and Friday brought us candles with higher highs and lows, which served as additional confirmation of a bullish sentiment.
With all that in mind, we currently have only one direction – to the upside. Of course, I’m talking about the mid-term situation because in the short-term we could have some kind of a drop, which would just be a normal correction. To make things clear – as long as we stay above the purple area, sentiment is positive.
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